Machinima Sounds Out Asia Platforms

The gaming-oriented network wants to be more than an MCN.

18 November 2016

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Update (November 18) Machinima is to be acquired by Warner Bros, owner of the DC comics franchise, after all. In a deal announced yesterday, the gaming network will move into Warner Bros’ six-month-old Digital Networks division, which manages the studio’s current investments in Machinima as well as other OTT assets such as DramaFever, the Korean drama specialist acquired from SoftBank last year.

“Warner Bros has been an active business partner in our transformation, so we already have proof points as to how the companies can work together,” said Machinima CEO Chad Gutstein.

Warner Bros Digital Networks launched in June under Craig Hunegs, business and strategy president for Warner Bros TV Network. Hunegs described the Machinima acquisition as “another meaningful move forward, as Warner Bros develops more direct relationships with our consumers.”

Machinima, a gaming-oriented online video network, is looking to boost its profile and monetization in Asia, as part of an ongoing diversification drive led by CEO Chad Gutstein.

Since taking up the reins in early 2014, Gutstein – former COO with US arts channel Ovation – has broadened both Machinima’s content focus as well as its distribution and windowing strategy.

This includes a push into the fast-growing e-sports business, where Machinima provides tournament coverage, in addition to centralizing resources for original production, where it has built on franchises such as Battlestar Galactica, Street Fighter and Transformers.

In July this year, the company announced an exclusive brand and content licensing deal with Sohu in China, a country where YouTube – Machinima's main distribution outlet – is blocked.

Gutstein is keen to see more visibility for Machinima in the region, after inking a series of VOD and SVOD deals in the US and Europe.

“We work with our partners, because we don’t understand local markets nearly as well as they do, to figure out the right business models,” he said, speaking at this year’s Casbaa conference in Macau.

“We tend to license our brand and content to them and then provide a lot of flexibility on rights, so they can build the best way to reach their audiences and monetize that.”

In Europe, Machinima recently tied up with AMC Networks to provide exclusive content for an SVOD service in Spain and Portugal.

In the US, Machinima runs its own paid video services on Amazon Prime and Sony’s PlayStation Vue. More will follow, Gutstein said.

The gaming company also supplies first window programming for Go90, Verizon’s free mobile service in the US, as well as VOD content for Sky in the UK.

CROSS-BORDER CULTURE

Machinima’s MCN – still the core of its business – attracts about 150 million unique visits each month, including 70 million in Asia.

The male skew is also softer in this part of the world, where female viewers represent 30% of visitors compared with about 15% worldwide.

Gaming culture is global, Gutstein contended, making it easier for user-generated content as well as professionally produced entertainment to cross borders.

“Globally, over 80% of content in our MCN is watched in a country different to the country where it was produced,” he told delegates at Casbaa.

“Even in the United States, 52% of the viewed content is produced outside the United States,” he added. “If you think about that from a television standpoint, that would be crazy.”

Gutstein’s appointment just under three years ago followed a spell of slowing momentum at Machinima, marked by lay-offs and management changes, at a time when online video networks were seen as a rising force in TV and digital media.

Machinima also shifted advertising strategy at the same time, outsourcing conventional ad sales to YouTube while refocusing on branded content and integration.

The company has been wooed by Warner Bros, which led two funding rounds totaling US$42 million into Machinima in March 2014 and February 2015.

The investments gave Warner Bros, owner of the DC comics franchise, an option for outright acquisition. Recent rumors of a possible takeover have subsided however, following AT&T’s bid for Warner Bros parent Time Warner.